Cautionary Note about Forward Looking Statements.

Certain matters discussed in this Form 10-Q are "forward-looking statements." The Company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because they include phrases such as the Company "expects," "believes," "anticipates" or other words of similar meaning. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include the matters described under the caption "Risk Factors" in Item 1A of Form 10-K for the year ended September 30, 2011. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this filing. The Company assumes no obligation to update such forward-looking statements to reflect subsequent events or circumstances.

Executive-Level Overview

This discussion relates to ATC Venture Group Inc and its consolidated subsidiary (the "Company") and should be read in conjunction with our consolidated financial statements as of September 30, 2011, and the fiscal year then ended, and Management's Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

We intend for this discussion to provide the reader with information that will assist in understanding our condensed consolidated financial statements, the changes in certain key items in those condensed consolidated financial statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our condensed consolidated financial statements. The discussion also provides information about the financial results of the various segments of our business to provide a better understanding of how those segments and their results affect the financial condition and results of operations of the Company as a whole. To the extent that our analysis contains statements that are not of a historical nature, these statements are forward-looking statements, which involve risks and uncertainties.

Overview for the Three Months Ended March 31, 2012 and 2011 (Unaudited)

The following is a summary of the results of operations for the three months
ended March 31, 2012 and March 31, 2011 (Unaudited):

                                                          Three Months Ended March 31,
                                               2012 (Unaudited)               2011 (Unaudited)

Revenue                                    $ 1,956,444        100.00 %   $    660,220        100.00 %

Cost of goods sold                           1,808,890         92.46 %        702,331        106.38 %

Gross profit (loss)                            147,554          7.54 %        (90,203 )      -13.66 %

Selling, general, and administrative
expenses                                       724,259         37.02 %        240,404         36.41 %

Loss from operations                          (576,705 )      -29.48 %       (330,607 )      -50.08 %

Other income (expense), net                    (23,350 )       -1.19 %        (23,998 )       -3.63 %

Loss from continuing operations before
income tax benefit                            (600,055 )      -30.67 %       (354,605 )      -53.71 %

Income tax benefit                                   -          0.00 %        123,623         18.72 %

Net loss from continuing operations           (600,055 )      -30.67 %       (230,982 )      -34.99 %

Net income (loss) from discontinued
operations, net of tax                           1,185          0.06 %     (1,120,729 )     -169.75 %

Net Loss                                   $  (598,870 )      -30.61 %   $ (1,351,711 )     -204.74 %

For the three months ended March 31, 2012, the Company reported a net loss of $598,870 or (30.61%) of revenue. This compares to the three months ending March 31, 2011 during which the Company recorded net loss of $1,351,711 or (204.74%) of total revenue. Total revenues from continuing operations more than doubled for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. This increase represents the build-up of the new lead operating segment and wrap-up of discontinued operations. Profitability was still lagging in the three months ended March 31, 2011 due to efficiencies temporarily lost in transition between discontinued operations and expansion of the contract manufacturing subsidiary.

BUSINESS SEGMENTS

The following is a summary of the results of operations for the six months ended
March 31, 2012 and March 31, 2011 (Unaudited):

                                                           Six Months Ended March 31,
                                               2012 (Unaudited)               2011 (Unaudited)

Revenue                                    $ 2,528,247        100.00 %   $  1,353,269        100.00 %

Cost of goods sold                           2,301,881         91.05 %      1,359,995        100.50 %

Gross profit (loss)                            226,366          8.95 %         (6,726 )       -0.50 %

Selling, general, and administrative
expenses                                       837,392         33.12 %        424,196         31.35 %

Loss from operations                          (611,026 )      -24.17 %       (430,922 )      -31.84 %

Other income (expense), net                    (34,310 )       -1.36 %        (65,126 )       -4.81 %

Loss from continuing operations before
income tax benefit                            (645,336 )      -25.53 %       (496,048 )      -36.66 %

Income tax benefit                                   -          0.00 %        136,331         10.07 %

Net income (loss) from continuing
operations                                    (629,336 )      -24.89 %       (359,717 )      -26.58 %

Net Income (loss) from discontinued
operations, net of tax                       1,709,591         70.03 %     (1,301,073 )      -96.14 %

Net income (loss)                          $ 1,064,235         42.09 %   $ (1,660,790 )     -122.72 %

For the six months ended March 31, 2012, the Company reported net income of $1,064,235 or 42.09% of revenue. This compares to the six months ending March 31, 2011 during which the Company recorded net loss of $1,660,790 or (122.72%) of revenue. Net income increased as well. The majority of these changes relate to a $2,143,979 gain on sale of the ATV segment, as this sale spiked revenues in the first quarter of fiscal year 2012. Operating sales were down due to segment declining projects below profit goals.

As of March 31, 2012, the Company operates four reportable business segments, two segments were sold in in the six month period ended March 31, 2012 and one that is held in discontinued operations.

Simonson Iron Works Inc., on wholly-owned subsidiary is engaged in contract manufacturing for original equipment manufacturers (OEM's) and other businesses in various industries.

Revenue

Revenue increased approximately 196% or $1,300,000 for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011 in the Simonsen Iron Works Inc. segment. This increase represents increased production in the remaining operating segment, as planned with recent strategic segment eliminations. The loss from discontinued operations decreased 57% or approximately $640,000, as the discontinued operations wound down to no material activities by March 31, 2012. For the six months ending March 31, 2012, net income increased 169% or approximately $2,800,000 over the six months ended March 31, 2011. This increase was partially due to the gain on sale of the ATV Accessories segment and partially due to strategic elimination of less profitable activities.

Cost of Goods Sold

The following table details components of direct costs of goods sold by segment
as a percentage of sales:

                                                                            Simonsen Ironworks Inc.
                                                   For the Three Months Ended                      For the Six Months Ended
                                                            June 30,                                       June 30,
                                            2012 (Unaudited)         2011 (Unaudited)       2012 (Unaudited)         2011 Unaudited

Materials                                               69.90 %                  64.26 %                66.58 %                59.63 %
Direct labor                                             7.74 %                   7.66 %                 7.62 %                 7.13 %
Mfg variance                                            -3.03 %                   1.04 %                -1.20 %                 1.56 %
Subcontract                                              0.54 %                   1.19 %                 0.51 %                 1.18 %
Royalty                                                  0.00 %                   0.00 %                 0.00 %                 0.00 %
Burden                                                   1.50 %                   9.24 %                 1.27 %                15.21 %
Mfg overhead                                            15.81 %                  22.99 %                16.26 %                15.79 %
                                                        92.46 %                 106.38 %                91.05 %               100.50 %

The cost of materials as a percentage of revenue increased for Simonsen Ironworks Inc., while total costs of goods sold for the segment decreased as a percentage of revenues. This change was due to the strategic management decisions made for lean production.

Expenses

Our selling, general and administrative expenses were approximately $647,000 and $240,000 for the three months ended March 31, 2012 and March 31, 2011, respectively.

The significant changes in expenses for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011 were:

· Prior to allocation between segments, the two major changes in selling, general and administrative expenses for the three month period ending March 31, 2012 compared to the three month period ending March 31, 2011were as follows:

· Management compensation decreased approximately $300,000 due to elimination of redundancies and aligning compensation with key performance objectives

· Compliance costs increased approximately $200,000 due to costs related to restatements of prior period data as disclosed in recent filings.

Liquidity and Capital Resources

Overview

Cash and cash equivalents were $16,286 as of March 31, 2012 compared to $25,185 as of September 30, 2011. Until required for operations, our policy is to invest any excess cash reserves in bank deposits, money market funds, and certificates of deposit after first repaying any built up balance on our bank line of credit.

Working Capital

Net working capital deficit was $991,334 as of March 31, 2012 compared to
$3,218,286 as of September 30, 2011.  The working capital ratio was .72 and .56
as of March 31, 2012 and September 30, 2011, respectively.

The following table summarizes the Company's sources and uses of cash and
equivalents for the periods indicated:

                                                                2012 (Unaudited)          2011

Net cash provided by (used for) operating activities of
continuing operations                                          $           16,695     $  1,840,799
Net cash used for investing activities of continuing
operations                                                                122,902          (73,430 )
Net cash (used for) financing activities of continuing
operations                                                               (138,766 )     (1,771,123 )
                                                               $           (8,899 )   $    104,882

The Company's principal uses of cash are to pay operating expenses, acquire necessary equipment and to make debt service payments. During the six months ended March 31, 2012, the Company used cash to make principal payments of approximately $404,000 against long-term debt and paid down approximately $2,713,000 on its lines of credit.

Capital Resources

Management believes that existing cash balances, cash flow to be generated from operating activities, and income tax refunds receivable and available borrowing capacity under its line of credit agreement will be sufficient to fund normal operations and capital expenditure requirements for the next twelve months. The Company is not considering any major capital investment for at least the next three months.

As of March 31, 2012 and as of September 30, 2011, the Company was in violation of its current ratio and term debt coverage ratio covenants in its loan agreements with its lender. As of March 20, 2012, the Company and its lender entered into a Secured Credit Agreement and Waiver. Under the terms of this Agreement, the lender agreed to waive the noncompliance by the Company with the required ratio of current assets to current liabilities as of September 30, 2011, March 31, 2012 and the Company's anticipated noncompliance with the required ratio of current assets to current liabilities through October 1, 2012 and further, to waive the Company's noncompliance with the Term Debt Coverage Ratio as of September 30, 2011, March 31, 2012, and the Company's anticipated noncompliance with the Term Debt Coverage Ratio through October 1, 2012.

Management expects to be able to comply with the requirements of the Secured Credit Agreement and has begun the process to secure a commitment for funding from an asset-based lender. Management believes this is an appropriate financing vehicle for its operations and expects to have a positive impact on the Company's working capital through fiscal year 2012. Further, this funding will help to continue the stabilization and turnaround of the Company while facilitating continued growth. The failure to obtain a replacement lender by June 30, 2012 could result in the lender foreclosing on its security interest resulting in a significant disruption to the Company's operations.

Our continued existence is dependent upon or ability to generate cash and to market and sell our products successfully. However, there are no assurances whatsoever that we will be able to borrow further funds from our lender or that we will increase our revenues and/or control our expenses to a level sufficient to provide positive cash flow.

Critical Accounting Policies and Estimates

The preparation of our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America, requires us to make judgments and estimates that may have a significant impact upon the portrayal of our financial condition and results of operations. We believe that of our significant accounting policies, the following require estimates and assumptions that require complex, subjective judgements by management that can materially impact the portrayal of our financial condition and results of operations, useful lives of fixed assets; impairment of long-lived asset, valuation of inventory, deferred taxes and warranties and allowance for doubtful accounts. These significant accounting principles are more fully described in Managements Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies in our Annual Report on Form 10-K for the year needed September 30, 2011.